Variable, fixed or portfolio? How to choose the right electricity contract
The contract type determines how much of the swings in electricity prices reach your invoice. How to choose based on load profile, volume, bidding zone and how much risk the business can tolerate.
Four contract types, four ways to share the risk
Choosing an electricity contract is less about which contract is cheapest and more about who bears the price risk. The spot price is the same for everyone in your bidding zone (elområde, one of Sweden's four electricity price areas). What the contract type determines is how much of the price swings comes through on your invoice, and what you pay the supplier to avoid them.
Variable contract: hourly or monthly price
With a variable electricity contract you pay the spot price plus the supplier's mark-up. There are two versions:
- Hourly price. You pay the price for the period in which the electricity was actually used. Since 1 October 2025 the day-ahead market has been traded in 15-minute periods, so settlement can take place per quarter-hour. Suits businesses that use a lot of electricity at night or can shift consumption to cheaper hours.
- Monthly price. You pay an average price for the month. Easier to follow, but the supplier often charges a profile cost if your consumption falls in hours that are more expensive than average.
A variable contract has no risk premium and therefore often works out cheapest over time. The trade-off is that your entire volume is exposed when prices rise.
Fixed price
With a fixed-price electricity contract you lock in the price per kWh for the contract period, usually one to three years. You know what electricity will cost, but the supplier adds a risk premium for carrying the risk on your behalf. The fixed price reflects futures prices on the day you sign. If you lock in when the market is high, you are stuck at that level for the whole period.
Winter-hedged or hybrid
A winter-hedged contract protects the most expensive months and lets the rest of the year run on a variable price. The set-up varies between suppliers: a fixed price for the winter months, a price cap or a fixed share of the volume. Check which months are included and what applies if the cap is reached.
Portfolio contract
In a portfolio contract consumption is price-hedged step by step, in several parts (tranches) at different times, according to a strategy you have decided in advance. The part that has not been hedged runs at the spot price. You get an average price instead of a single purchase point, but it requires a larger volume and someone to follow it up. Ask what minimum volume the supplier requires and what fees the management involves.
Five questions that decide the choice
1. What does your load profile look like?
A steady round-the-clock load is easy and cheap to hedge. A load with clear peaks, for example during evening service, means a monthly-price contract can be more expensive than it looks because of the profile cost. If you can shift consumption to the night, that points to an hourly price for the unhedged part. If consumption is concentrated in winter, winter protection matters most.
2. How large is the volume?
The larger the volume, the more every öre is worth and the more it pays to spend time on strategy. For a small consumer, the difference between contract types is often a few thousand kronor a year. Then simplicity and the right contract length matter more than optimising.
3. Which bidding zone are you in?
Southern Sweden, SE3 and SE4, normally has higher and more volatile prices than SE1 and SE2, especially in winter. The same contract therefore carries different risk depending on where the site is located. If you have sites in several bidding zones, it may make sense to hedge them differently. You can find the spot price per zone under spot price SE3 and the corresponding pages.
4. How much price risk can you tolerate?
Ask yourselves what happens if the electricity cost for a winter month is twice what was budgeted. Is there headroom in your cash flow? Is your income fixed in advance, such as municipal funding or an annual fee? The harder it is to pass a cost increase on to customers or members, the stronger the case for hedging.
5. What do you know about the future?
Are you going to move, expand, electrify vehicles or close a site? Never hedge more volume or for longer than you are sure you will use. Otherwise any surplus that has been hedged has to be settled against the market price, and that can be costly.
You do not have to choose just one
Many businesses end up with a combination: the base load, the consumption that is always there, is hedged and the rest runs on a variable price. This gives security for the volume you know about without locking in what is uncertain. A common starting point is to hedge part of the volume and let the rest follow the market, then adjust the share when the contract is renewed.
How to compare contract types
- Get your hourly or monthly consumption for the past year from the network operator or supplier.
- Calculate what the year would have cost with each contract type, using your own consumption and the actual spot prices in your bidding zone.
- Also calculate a bad year: what happens if winter prices are twice as high?
- Compare the total cost including mark-up, fixed fees and any management fee.
The difference between the variable and the fixed option in a normal year is roughly what the security costs. The difference in the bad year is what it is worth.
Common mistakes
- Choosing a fixed price straight after a period of high prices, when futures prices are still high.
- Hedging the entire budgeted volume and then using less.
- Comparing contracts of different lengths without converting them to the same period.
- Believing that the electricity contract affects the grid fee (nätavgift, the charge paid to the network operator). The capacity charge (effektavgift, a fee based on your highest power demand) and subscribed capacity are a separate matter with the network operator.
Tip: Ask the same supplier for quotes on two contract types, for example variable and fixed for the same period. The difference shows what the risk costs you specifically.
How different industries choose
Which contract type suits you depends on when and how much electricity you use. Choose your industry for a worked example and what usually decides the choice.
- Energy advice for restaurants
Example: A restaurant using 180,000 kWh a year has its largest load at lunch and during evening service, and in winter the evening coincides with the most expensive hours of the day. If the spot price one year is 50 öre/kWh higher than expected, it costs 90,000 kr with everything on a variable price, but 36,000 kr if 60 per cent of the volume is hedged. Hedge the part of the load that is always there, refrigeration, freezers and ventilation, and let the rest run on a variable price. Read more: Which electricity contract suits a restaurant's load profile.
- Energy advice for hotels
Example: A hotel using 800,000 kWh a year hedges 80 per cent of its budgeted volume in a portfolio contract. If occupancy is lower than expected and the hotel only uses 680,000 kWh, the 640,000 hedged kWh are used up and the remaining 40,000 kWh run on a variable price. Had the entire volume been hedged, 120,000 kWh would have been left over, and with a market price 30 öre below the hedged price that costs 36,000 kr. Let the hedge ratio follow the occupancy forecast, not last year's outcome.
- Energy advice for industrial companies
Example: For an industrial company using 4,000,000 kWh a year, every öre is worth 40,000 kr. If the company locks in the entire volume at a single point and the price turns out to be 20 öre too high, it costs 800,000 kr. If purchases are split into four tranches of 1,000,000 kWh, a poor purchase point only affects a quarter, 200,000 kr. Also consider whether production can be moved to night shifts; the unhedged part on an hourly price can then become cheaper. Read more: Portfolio contract or fixed price for industry.
- Energy advice for property owners
Example: A property company using 2,500,000 kWh recharges 1,000,000 kWh to tenants at actual cost. The price risk for that part is therefore already borne by the tenants. It is the 1,500,000 kWh of landlord electricity, included in the rent, that hits net operating income: a price 10 öre higher equals 150,000 kr. Start the hedging strategy there, and adapt it to how the leases are written. Read more: Portfolio strategy for property companies.
- Energy advice for housing cooperatives
Example: A housing cooperative (BRF) with 45 flats uses 90,000 kWh of communal electricity a year. A price rise of 30 öre/kWh equals 27,000 kr, or 600 kr per flat per year, and that cost cannot be recovered until the monthly fee is raised. A fixed contract running over the same period as the budget means the board can rely on the figure. If the building is heated by electricity or a heat pump, winter weighs more heavily and a winter-hedged contract may be an option. Read more: Electricity contracts for housing cooperatives.
- Energy advice for shops & retail
Example: A shop using 120,000 kWh a year has its highest sales in November and December, the same months in which electricity prices are often at their highest and opening hours are longest. If December uses 14,000 kWh and the spot price is 50 öre above the annual average, the month becomes 7,000 kr more expensive. Hedge the base load from refrigeration, ventilation and night lighting, and let the rest run on a variable price. That way the extra consumption from Christmas trading does not affect the entire volume.
- Energy advice for grocery stores
Example: A grocery store using 500,000 kWh a year has refrigeration and freezers running around the clock and cannot shift load to cheaper hours. An hourly price therefore offers little advantage, while the predictable volume is easy to hedge. With 70 per cent hedged, only 13,500 kWh of a 45,000 kWh winter month is exposed. If the price is 60 öre above plan, it costs 8,100 kr instead of 27,000 kr.
- Energy advice for agriculture & farming
Example: A dairy farm using 250,000 kWh a year uses 110,000 kWh in November–March for milking, cooling, ventilation and heating in the barn. A winter price 40 öre above normal equals 44,000 kr, and that is the risk a winter-hedged contract removes. The grain dryer uses its 40,000 kWh in August and September, when the price is often lower, and can run on a variable price. A full-year fixed price, by contrast, pays for winter risk even on the dryer's volume.
- Energy advice for offices & serviced offices
Example: An office using 200,000 kWh a year uses roughly 70,000 kWh at night and at weekends for ventilation and servers, and the rest during office hours. If the base load is hedged and the 130,000 kWh used in the daytime run on a variable monthly price, the exposure to a 20 öre price rise is 26,000 kr instead of 40,000 kr. An hourly price offers little advantage because consumption is in the daytime. For a serviced office where occupancy varies, hedge a lower share so that you do not commit volume that may not be used.
- Energy advice for logistics companies
Example: A logistics company using 800,000 kWh a year plans to electrify its lorries and reach 1,200,000 kWh in two years. If the entire future volume is hedged now and the electrification is delayed, 400,000 kWh will be left over. With a market price 25 öre below the hedged price, that costs 100,000 kr. Hedge the volume you have today and add more as charging actually comes into use. Night-time forklift charging is well suited to an hourly price.
- Energy advice for property managers
Example: A property manager has twelve clients with a total of 3,000,000 kWh a year. The smallest owner, with 120,000 kWh, would hardly have qualified for a portfolio contract alone, but in the pool everyone gets the same terms. The clients do, however, have different risk appetites: one wants a fixed budget, another accepts a variable price. Set the hedge ratio per client within the pool and document the decision in the management agreement.
- Energy advice for health centres
Example: A private health centre using 150,000 kWh a year has income that is largely fixed in advance through funding from the region. A price rise of 30 öre/kWh equals 45,000 kr that cannot be passed on to patients. A fixed contract provides predictability without follow-up. First check whether electricity is included in the rent, because then it is the landlord's contract that matters.
- Energy advice for hospitals
Example: A hospital using 15,000,000 kWh a year is affected by 1,500,000 kr for every 10 öre change in price. The entire volume cannot be locked in at one time, nor can it be left fully variable. A portfolio contract with a mandate decided by the region, for example what share should be hedged within one, two and three years, allows hedging to take place in tranches without new decisions each time. The mandate also needs to fit into the procurement of the electricity contract.
- Energy advice for dental clinics
Example: A dental clinic using 40,000 kWh a year pays 4,000 kr more if a fixed price is 10 öre above what a variable price would have cost. The difference is small in kronor, and for a clinic without its own administration it is reasonable to pay to avoid following the market. More important than the contract type is that the contract length suits you, that you know when it expires and that no fixed monthly fee eats up the savings.
- Energy advice for care homes for the elderly
Example: A care home using 400,000 kWh a year with electric heating or a heat pump uses roughly 220,000 kWh in November–March. A winter price 50 öre above normal equals 110,000 kr, while the funding per place from the municipality stays fixed. A portfolio contract or a winter-hedged contract removes most of the risk. Comfort and temperature cannot be reduced on cold days, so the protection needs to be in the contract.
- Energy advice for haulage companies
Example: A haulage company using 300,000 kWh a year charges electric lorries with 200,000 kWh at night at the depot. If the night hours are on average 15 öre below the daily average, an hourly price on the charging gives a cost 30,000 kr lower than a monthly price. The workshop and office account for the base load and can be hedged. Charging grows as more vehicles are replaced, so leave that part outside the hedge.
- Energy advice for car dealerships
Example: A car dealer using 250,000 kWh a year has a steady load of 180,000 kWh from the showroom, workshop and lighting, plus rapid charging that varies with test drives and customer charging. The charging volume of 70,000 kWh could just as easily be half or double. Hedge the base load and let the charging run on a variable price, so you avoid paying for hedged volume that is not used.
- Energy advice for car repair shops
Example: A car repair workshop using 90,000 kWh a year has peaks from the compressor and lifts, and most of its work during the tyre seasons in October–November and March–April. A fixed price 10 öre above the variable price costs 9,000 kr a year, a reasonable premium for a workshop that does not want to follow the electricity price. Spend the time instead checking that the main fuse and grid subscription are correctly sized; there is often more to gain there.
- Energy advice for bakeries
Example: A bakery using 350,000 kWh a year runs its ovens between 01:00 and 06:00, when the spot price is often lower than during the day. If 210,000 kWh falls in hours that are on average 12 öre below the daily average, an hourly price gives a cost 25,200 kr lower than a monthly price. A portfolio contract in which the base load is hedged and the rest runs on an hourly price makes use of this. Also look into an energy tax refund for the electricity used in production; that is a separate matter.
- Energy advice for gyms & fitness centres
Example: A gym using 200,000 kWh a year has a steady load from ventilation, saunas and hot water over long opening hours, and the most visitors in January–March. If those months use 60,000 kWh and the price is 50 öre above plan, that is an extra 30,000 kr just when membership fees have already been set for the year. A fixed or winter-hedged contract that runs in step with membership pricing provides predictability.
- Energy advice for spas & swimming centres
Example: A swimming centre using 1,800,000 kWh a year is affected by 180,000 kr for every 10 öre change in price. The pool water retains heat for a long time, so heating can to some extent be shifted by a few hours without guests noticing. Hedge the base load in tranches and let a smaller part run on an hourly price, where the flexibility pays off. Also check how much of the heating is actually electric and how much is district heating.
- Energy advice for camping & campsites
Example: A campsite using 200,000 kWh a year uses 150,000 kWh in May–September and 50,000 kWh the rest of the year. A full-year fixed price is calculated with winter prices included and is therefore a poor fit. Hedge the peak-season volume so that you know what electricity costs when you set prices for electric hook-ups and cabins, and let the winter run on a variable price. The small winter volume makes a price rise manageable.
- Energy advice for warehouses
Example: A warehouse business using 500,000 kWh a year hedges three years ahead, but the lease only runs for two more years. If you move after two years, 500,000 kWh of hedged volume remains, and with a market price 20 öre lower it costs 100,000 kr to settle. Let the length of the hedge follow the lease, and schedule forklift charging so that the variable part falls in cheap hours.
- Energy advice for schools & preschools
Example: An independent school using 400,000 kWh a year with 400 pupils is affected by 80,000 kr from a price rise of 20 öre/kWh, or 200 kr per pupil. The per-pupil funding is set annually and cannot be adjusted afterwards. A fixed or winter-hedged contract that runs per budget year provides predictability. Municipal schools are often covered by the municipality's procured electricity contract, so check what already applies before signing anything of your own.
- Energy advice for server halls & data centres
Example: A data centre using 20,000,000 kWh a year has an almost completely flat load, and every öre is worth 200,000 kr. If customer contracts with a fixed price per kW run for three years, it is reasonable for the hedge to cover a large part of the same period. If the hedge is shorter than the customer contracts, the data centre itself bears the price risk on income that is already locked in. Long-term contracts linked to renewable generation may be an option at this volume.
- Energy advice for refrigeration plants
Example: A cold storage facility using 1,500,000 kWh a year hedges 70 per cent and lets 450,000 kWh run on an hourly price. If a third of the variable consumption, 150,000 kWh, can be shifted to hours that are 20 öre cheaper, that gives 30,000 kr a year. How much can be shifted depends on the goods' temperature requirements and how long the store holds its temperature. Run the numbers for your own facility before deciding how large the variable part should be.
- Energy advice for churches & parishes
Example: A parish using 300,000 kWh a year uses around 70 per cent, 210,000 kWh, in October–March to heat churches and parish halls. A winter price 40 öre above normal equals 84,000 kr. Hedge the winter share and let the summer run on a variable price, when the buildings are hardly heated. If the sites are in different bidding zones, the hedge may need to look different for each. Read more: Electricity contracts for churches and parishes.